Seeking Rate Increases, Insurers Use Guesswork

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As insurers providing coverage under the Affordable Care Act gained experience in the market with customers signing up on HealthCare.gov, they filed for increases in premiums next year ranging up to 85 percent.CreditCreditC.J. Gunther for The New York Times

In a sign of the tumult in the health insurance industry under the Affordable Care Act, companies are seeking wildly differing rate increases in premiums for 2016, with some as high as 85 percent, according to information released on Monday by the federal government for the 37 states using HealthCare.gov as their exchange.

The data from the Centers for Medicare and Medicaid Services included only proposed rate increases of 10 percent or more, and federal officials emphasized that it would be months before final rates were set. Regulators in some states have the authority to overrule rate increases they deem to be too high.

Experts cautioned against relying too heavily on the data as a predictor of prices for next year.

“Trying to gauge the average premium hike from just the biggest increases is like measuring the average height of the public by looking at N.B.A. players,” said Larry Levitt, an executive with the Kaiser Family Foundation.

But many insurers, including those seeking relatively hefty increases below 10 percent, say they are asking for higher premiums because they remain unsure about the future and what their medical costs will be.

“The insurers are in the business of taking risk, but the one thing they hate is uncertainty,” Mr. Levitt said.

Many unknowns remain. Among them are the questions of how many more people will sign up for coverage and what the state of their health will be. Healthier customers can generally lower costs for the overall group. Other uncertainties include the effect of the law’s protections against large losses for insurers, and a Supreme Court decision that will determine whether subsidies will be available in the states participating in the federal exchange.

Some of the requests for premium increases show how insurers are struggling to find the right balance between keeping their prices low enough to attract customers but high enough to cover costs — and make a profit.

In Delaware, the state’s insurance regulator said on Monday that two insurers asked for much higher rates in 2016: Highmark Blue Cross Blue Shield sought a 25 percent increase, while Aetna wanted an increase of 16 percent.

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Health insurers said many unknowns remained, including how many people would sign up for coverage and how healthy they would be.CreditBrendan Smialowski/Agence France-Presse — Getty Images

“Large rate increase requests like these are occurring in several states across the country,” said Karen Weldin Stewart, the Delaware insurance commissioner, who said she planned to try to reduce those rate requests.

In Georgia, Alliant Health Plans is seeking increases as high as 85 percent for some plans, with an average increase of 38 percent, according to the filing listed on the federal website, ratereview.healthcare.gov. The insurer declined to comment on the filing.

But there are wide variations in some states. In Maryland, for example, while CareFirst BlueCross BlueShield is seeking a 30-percent increase for some of its plans, others including Cigna, Kaiser Permanente and UnitedHealthcare are proposing to lower premiums for some plans.

Federal officials point out that consumers will have a choice of plans, just as they did last year. Many people kept their costs low by switching plans; 29 percent of those who re-enrolled picked a different policy from the previous year.

Some insurers like Anthem, one of the largest for-profit companies, say they do not expect significant increases in most markets. Most of the for-profit insurance companies have reported strong financial results, benefiting in part from the subsidies that have generated millions more paying customers.

But others say they need to adjust rates because they miscalculated their medical costs and the strength of the competition.

“Some may have been overly optimistic and some may have been pessimistic,” said Sabrina Corlette, a health insurance researcher at Georgetown University. “It’s so difficult because there are so many different factors at play.”

In Tennessee, BlueCross BlueShield said it lost $141 million on individual policies sold on the exchange because it was paying $1.14 in medical care for every dollar in premiums. The company has requested an average rate increase of 36 percent.

Many people signing up were much sicker than the insurer expected, said Roy Vaughn, a spokesman for the Tennessee plan. “We’re trying to get it as right as we can,” he said.

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The HealthCare.gov website at an enrollment event in Texas earlier this year.CreditLM Otero/Associated Press

In some cases, the miscalculations are causing insurers to rethink their strategy. Faced with significant losses from selling policies on the exchange, Assurant Health, a for-profit insurer that had been an aggressive participant last year, said it was looking for someone to take over its business or it would leave the market in 2016.

In Connecticut, HealthyCT, one of the consumer-oriented co-op plans created under the federal law, is requesting an average rate increase of 14 percent, after decreasing premiums for 2015.

Whether state regulators will agree to the increase request remains an open question, said Ken Lalime, the co-op’s chief executive. “I don’t know if that’s the final number we’ll end up with.”

Like many insurers, HealthyCT said it was less protected from losses as provisions of the law that were meant to encourage companies to enter the market were phased out. Insurers are also uncertain whether they are enrolling people who are sicker than customers of their competitors and whether they will be reimbursed for their higher risk.

“It’s the year of actuarial uncertainty, and actuaries are conservative,” said Dr. Martin Hickey, chairman of the National Alliance of State Health CO-OPs and the chief executive of the New Mexico exchange. “The safest thing to do is to raise rates.”

And while the companies say they have not generally seen a rapid rise in medical costs that would cause them to raise rates sharply for 2016, Mr. Lalime and other executives are quick to point to the high cost of new drugs like those used to treat hepatitis C.

Ms. Corlette and others say they believe insurers will continue to try to offer low prices, especially for midlevel plans. While insurers may not be overly optimistic that there will be a large number of additional customers signing up next year, the fact that people have switched plans may mean they can still capture market share. “It may change the incentives,” Ms. Corlette said.

As insurers gain more experience in the market, the expectation is that they will be confronted with fewer surprises. And while the Supreme Court decision is not expected to affect next year’s pricing, insurers are uncertain about that as well.

Many plans have decided to take a sit-back-and-wait posture about the case, said Richard M. Judy, a principal in PwC’s health consulting business.

“Health plans have put so much time and effort getting ready for these exchanges,” he said. “It would be a crushing blow to see that all unraveled.”